Over the past decade, Chrysler has regularly flirted with financial disaster. In the late nineties, with sales falling, the company allowed itself to be taken over by German automaker Daimler who pumped billions into the company. Yet even with the legendary German company modernizing factories and updating the product line, Chrysler's market share continued to slip.

In 2007, Daimler sold the company for a paltry 500 million dollars to private equity firm Cerberus Capital Management, who immediately began to tart-up the product line in anticipation of "flipping" the company. Cerberus also began to systematically strip the car manufacturer of valuable assets, including Chrysler's sprawling Michigan corporate headquarters and the companies auto loan division. Throughout 2007, auto sales continued to languish, but cheap money allowed Chrysler to continue borrowing its way off the edge of the abyss.

Everything changed in 2008. The spike in gas prices along with the stock market crash and the subsequent credit crunch hit the auto manufacturing industry hard. Chrysler found itself with a product line of gas guzzlers nobody wanted, a maxed-out company credit line, and an owner, Cerberus, who couldn't wait to unload the failing company. With Cerberus repeatedly refusing to invest another dime in Chrysler, it was a tough sell.

Cerberus first tried to sell the company to General Motors, but as the economy deteriorated, they were reduced to offering the company to automakers from Japan, China, India, France, and eventually, Italian automaker Fiat.

While shopping the company around, Cerberus executives discovered what the auto makers at Daimler probably knew when they dumped Chrysler in their lap: there wasn't an auto company on the planet interested in purchasing Chrysler---at any price.

Fiat executives presented Chrysler with an interesting counter-offer: together, they would form a strategic alliance. Chrysler would provide Fiat access to its dealership network and certain manufacturing capabilities in exchange for Chrysler gaining access to Fiat's cutting-edge drive train and small engine technologies. The catch? Fiat wasn't willing to pony up any cash to finance the deal.

With Chrysler running out of cash, John Snow, Cerberus's chief executive (and former Secretary of Treasury under George Bush) turned to his old friend in the White House for help. In late December, Chrysler received a 4 billion dollar loan from the United States government. Chrysler had to come up with a plan for reorganization before March 31st.

This week, Chrysler's reorganization plan was rejected by the Obama administration, who saw no way for the smallest of America's 'Big Three" to survive unless they entered into a marriage with another like-sized auto company.

And who will be the groom? Fiat. Maybe.

The Italians have made it clear they are anxious to regain a foothold in North America. Chrysler's extensive dealership network would allow Fiat to immediately begin selling versions of their fuel-efficient cars to American consumers. And Chrysler's strongest selling brands--- Jeep and Dodge trucks---fill a gap in Fiat's product line.

The Obama administration is offering Fiat an enticing market basket of financial carrots to help seal the deal; renegotiated terms with Chrysler debt holders including banks, bondholders, parts suppliers, and the United Auto Workers, along with a six billion dollar TARP loan and the possibility of additional money down the road.

In addition, the Obama administration is expected to force majority owner Cerberus Capital Management to give up their 79% stake in the failing auto company. Cerberus has proven remarkably inept in managing Chrysler, seemingly more interested in profiting from Chrysler's misfortune than coming up with a meaningful plan to return the company to profitability. In addition, Cerberus is under congressional scrutiny over how they've spent earlier government loans.

Yet despite the generous incentives, there are compelling reasons for Fiat to pass on any deal with Chrysler. First and foremost, Fiat may decide to wait another month and let Chrysler slip into bankruptcy. In that way, Fiat avoids being responsible for paying back the billions of dollars Chrysler owes suppliers, banks and the union retirement and health plans. Why buy a big company burdened with massive debt obligations when you can wait thirty days and avoid shouldering legacy debt obligations? Waiting might allow you to cherry-pick the parts of the business you really want. The only incentive that might compel Fiat to takeover Chrysler before bankruptcy is cash and lots of it, kindly provided by the American taxpayer.

Today, Chrysler manufacturing quality trails almost every other automaker. Its model line is heavy with large sedans and trucks and light on smaller, fuel-efficient vehicles. Unlike GM and Ford, Chrysler has minimal foreign operations and thus cannot easily increase auto sales overseas. Besides, its gas guzzling product line would be of little interest to potential European and Asian consumers. Since private equity firm Cerberus Capital Management acquired the company from German automaker Daimler Benz in 2007, production capacity has been reduces 33% and the work force shrunk by over 32,000 people. In January, sales were down more than 50%.

You want to help preserve American manufacturing jobs and save the American auto industry?

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